Market Analysis

EU shares sliding lower as investors brace for a new macro developments

EUROPEAN SHARES 
European shares followed the global trend, sliding lower, as investors brace for a new batch of major macro developments this week. Consumer discretionary and tech shares are among the worst performers today on the old continent, driving benchmarks lower from Frankfurt to Lisbon, as traders prefer to drive their exposure towards safer havens. Today’s decreased appetite for stocks took place as some investors preferred to take some profits out following the solid performances registered in July, and ahead of another batch of macro news. Today’s US JOLTs data, tomorrow’s OPEC+ meeting, Thursday’s BoE’s decision and Friday’s US NFP are among the events likely to keep markets significantly volatile this week. In addition, traders also have to deal with the prospect of rising US-China tensions over Taiwan, which adds to the current geopolitical uncertainty already brought by the war in Ukraine. However, despite all of these uncertain market drivers, today’s price action can also be seen as a technical correction, with markets correcting and establishing a new floor level following the recent break-out of major resistances.

Investors are likely to wait and see how all these data and geopolitical developments will play out before adjusting their portfolio. Meanwhile, corporate results will also continue to impact market sentiment with today’s reports from BP, Airbnb, Alibaba and Bouygues.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

FOREX

The US dollar remains close to the lowest level in weeks, which it touched earlier today. Data released on Monday was disappointing, showing a pronounced fall in manufacturing activity in the US during the month of July. The index, which measures the performance of the greenback versus its peers has now dropped more than 3.5% since hitting an almost 20-year maximum in mid-July, as investors started pricing in a slowdown in the pace of the Fed’s rate hiking. With the United States technically in recession, following a second consecutive quarter of negative GDP growth, investors will be looking into the release of employment data on Friday which, if disappointing, could reinforce expectations of a Federal Reserve shift to a more dovish stance, and create scope for further dollar losses.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

OIL

Brent oil prices are falling during early Tuesday trading, continuing the movement initiated during the previous session. The release of disappointing manufacturing data reinforced the view that a recession is looming on the horizon, a scenario that entails a drop in future demand for oil. At the same time, some observers believe that the OPEC meeting being held tomorrow could result in the announcement of an increase in output during the month of September. As the markets digest the prospect of a reduction in demand, driven by the global economic slowdown, and an increase in supply, there may be scope for further easing in oil prices.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

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